Mullen Group Ltd. reports third quarter financial results
OKOTOKS, AB, Oct. 24, 2012 /PRNewswire/ - (TSX:MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") reported its financial and operating results for the period ended September 30, 2012, with comparisons to the same period last year.
For the three month period ended September 30, 2012, Mullen Group generated consolidated revenue of $335.4 million and operating income of $70.4 million. Mullen Group generated net cash from operating activities of $74.5 million, which was used, among other things, to acquire net property, plant and equipment of $33.6 million, pay dividends of $20.2 million and pay interest obligations of $4.3 million.
Mullen Group's consolidated revenue of $335.4 million was a decrease of $24.3 million, or 6.8 percent, from the $359.7 million generated in 2011. The decrease in consolidated revenue was attributable to a $28.3 million decline in revenue experienced by the Oilfield Services segment, which was somewhat offset by a $4.0 million increase in revenue generated by the Trucking/Logistics segment.
The Oilfield Services segment contributed revenue of $202.9 million, a decrease of $28.3 million, or 12.2 percent, from the $231.2 million generated in the prior year period. The majority of the decrease in revenue occurred in those businesses tied to drilling activity as a result of a 17.3 percent decline in total wells drilled and a 21.9 percent decline in the length of metres drilled compared to the same period in 2011. In addition, revenue generated by Canadian Dewatering L.P. decreased as a result of the second quarter 2012 completion of the design, build and commissioning of the Thin Fine Tailings ("TFT") barge system project for a large oil sands operator, a decrease in revenue related to tailings reduction operations in the oil sands, and a decrease in revenue associated with pump rentals due to dryer conditions in western Canada in this period compared to the same period in 2011. Finally, revenue decreased due to delays in pipeline construction projects. These decreases were somewhat offset by increased revenue experienced by certain businesses tied to fluid hauling, related well servicing and production services. The Trucking/Logistics segment contributed revenue of $133.7 million, which was an increase of $4.0 million over the prior year period. This increase was due to stronger demand for transportation services in western Canada and is attributable to the strength of the western Canadian economy.
Mullen Group's operating income of $70.4 million decreased by $10.7 million, or 13.2 percent, from the $81.1 million generated in 2011. The decrease in operating income was mainly attributable to the lower demand experienced by the Oilfield Services segment, particularly for those businesses tied to drilling activity. Operating income in the Oilfield Services segment accounted for $10.6 million of the decrease while Corporate costs accounted for $0.8 million. These decreases were partially offset by a $0.7 million increase in operating income generated by the Truckling/Logistics segment. This $0.7 million increase was a direct result of the additional revenue recognized in the Trucking/Logistics segment. As a percentage of consolidated revenue, operating income decreased to 21.0 percent as compared to 22.6 percent in 2011.
"Overall, Mullen Group's third quarter performance met our expectations. As we entered the quarter there were clear signs of decreased drilling activity in western Canada, the results of which translated into decreased revenue in our businesses tied to drilling. In addition, we expected a decrease in revenue as a result of Canadian Dewatering L.P. completing the TFT barge system project in the previous quarter, a delay in a client's schedule for the kickoff of their tailing reduction operations, and a reduction in pump rentals this period compared to last year which many will recall was unseasonably wet in many areas of Saskatchewan and Manitoba. It is also important to note that the delay of a number of large pipeline construction projects negatively impacted our revenue in the quarter, however, we expect this revenue will be made up on a go forward basis. On a more positive note our Trucking/Logistics segment, with its diverse service offerings and multi-modal transportation capabilities, benefited from the continued activity in western Canada. Despite the 6.8 percent decrease in consolidated revenue, our business units were able to maintain a strong operating margin of 21.0 percent, which reinforces the strength of Mullen Group's business model and our continued focus on cost control," stated Mr. Stephen H. Lockwood, President and Co-Chief Executive Officer.
In the third quarter of 2012, Mullen Group generated net income of $42.9 million, or $0.52 per share, an increase of $31.6 million or 279.6 percent, as compared to $11.3 million or $0.14 per share in 2011. The $31.6 million increase in net income was mainly attributable to a $27.9 million positive variance in unrealized foreign exchange and a $15.5 million positive variance in the fair value of investments. These increases were somewhat offset by the $10.7 million decrease in operating income. Adjusting Mullen Group's net income and earnings per share to eliminate the impact of unrealized foreign exchange and the change in fair value of investments during the third quarter of 2012 results in adjusted net income of $30.8 million and adjusted earnings per share of $0.37, as compared to $37.5 million and $0.47 per share in 2011, respectively. These adjustments more clearly reflect earnings from an operating perspective.
For the nine month period ended September 30, 2012, consolidated revenue increased by 8.9 percent to $1,081.5 million from $993.2 million in the same period last year. Operating income was $222.6 million, up 9.0 percent from $204.2 million in 2011. Net income increased by 51.7 percent to $109.1 million from $71.9 million in 2011.
A summary of Mullen Group's results for the three and nine month periods ended September 30, 2012, and 2011, along with revenue and operating results by segment are as follows:
($ millions, except per share amounts)
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|Net Income - adjusted(2)||30.8||37.5||(17.9)||103.3||86.6||19.3|
|Earnings per share(3)||0.52||0.14||271.4||1.34||0.90||48.9|
|Earnings per share - adjusted(2)||0.37||0.47||(21.3)||1.27||1.09||16.5|
|Net cash from operating activities||74.5||50.7||46.9||212.2||149.8||41.7|
|Net cash from operating activities per share(3)||0.90||0.63||42.9||2.60||1.88||38.3|
|Cash dividends declared per Common Share||0.25||0.25||-||0.75||0.75||-|
(1) Operating income is defined as net income before depreciation on property, plant and equipment, amortization on intangible assets,
finance costs, unrealized foreign exchange gains and losses, other (income) expense and income tax expense.
(2) Net income - adjusted and earnings per share - adjusted are calculated by adjusting net income and basic earnings per share by the
amount of any unrealized foreign exchange gains and losses and by the change in fair value of investments.
(3) Earnings per share and net cash from operating activities per share are calculated based on the basic weighted average number of
Common Shares outstanding for the period.
Operating income, net income - adjusted and earnings per share - adjusted are not recognized terms under Canadian GAAP and do not
have standardized meanings prescribed by Canadian GAAP. Management believes these measures are useful supplemental measures.
Investors should be cautioned that these indicators should not replace net income and earnings per share as indicators of performance.
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This news release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas industry and the overall economy. Mullen Group believes that the expectations reflected in this news release are reasonable, but results may be affected by a variety of variables. Mullen Group relies on litigation protection for "forward-looking" statements.
Mullen Group is a company that owns a network of independently operated businesses. Today the Mullen Group is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and as one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. Mullen Group provides management and financial expertise, technology and systems support to its independent businesses.
Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.
SOURCE Mullen Group Ltd.